What Do You Do If You're The CEO Of A Company Touted In A Pump-And-Dump Stock Scam?

from the sell! dept

It's already been well documented that there really are a lot of idiots out there who buy stock recommended in spam messages. They all lose money when the spammer (who buys earlier) then sells, but apparently the pump-and-dump stock spam concept still works, despite it being around for many years. However, there is another side of the story that's rarely covered. What do you do if you actually work at one of the companies touted in a stock spam scam? Some people naturally assume that these companies are in on the scam, but that's often not the case. Spammers make money either way. So, for legitimate companies, it's become something of a hassle to find their stock (which usually is already in some sort of trouble) suddenly bounce around due to a spam onslaught. Of course, it would seem like it really shouldn't be that difficult to track down who's responsible for the spam. You just need to follow the money and find out who bought the stock right before the spam and then sold right after.

"You just need to follow the money and find out who bought the stock right before the spam and then sold right after."

IANA broker, but I'm guessing you'd use fake identity, anonymous offshore accounts, or whatever to buy the stocks, if you were doing this for a living. Would be silly to spend time (or money) getting a botnet set up and spewing spam, only to incriminate yourself so obviously by using your real identity to buy and sell the stocks.

GET ON THIS BULL RUN NOW!
WATCH WEXE ON MON NOV 27TH!
Disclaimer: Information within this email contains "forward looking statements"
within the meaning of Section 27a of the Securities act of 1933 and Section 21B
of the Securities exchange act of 1934. The Publisher of this report was
compensated by an unrelated third party twenty five thousand dollars for
distribution of this report.

Buying stocks from a stranger?

I still remember when a close family member (I won't identify who, since it would probably be a little embarassing for them) bought some stuck from a stranger over the phone who happened to call (this was before the days of email).

They bought about $1000 worth of stock in a small mining company that went out of business within a few weeks. I was completely surprised that this family member (who is a very intelligent and worldly person otherwise) would be suckered into such a scam.

I guess it just goes to show that even smart people are not smart all the time. Or we all make mistakes? Maybe I'm just not very good at picking out morals from stories.

Following the money isn't all that easy

Its not all that easy in some financial institutions to be able to track who is buying or selling a stock. Systems like that are expensive, and some firms do a better job than others. Sure, you can go back over time to figure those things out, but its not an easy process.

Not easy you say? This is all about KYC (know your customer), AML (Anti-money laundering) and CIP (customer information programs) and even the big boys don't do this well. The SEC has put everyone on notice that the 07 audits won't be like the past, and no one is doing a good job. Wall Street is running scared, and since they recently got involved with securities, banks are too stupid to know they should be afraid.

There are banks and wall street firms out there who are paying huge fines today over these issues. Fines about $200 million dollars. Do you ever read about them? Of course not, because the company sure doesn't want that information out there, and the govt. doesn't want it out there because it would make it easier for copycat or criminal or terrorists to move money.

Following the money is really hard to do. It takes time and effort. Think they really care that much about a pump and dump?